March 17, 2011

Proposed IRS Changes Would Give States Easier Access to Records on Nonprofits

The Internal Revenue Service is seeking public comments on proposed rule changes that would make it easier for state officials who regulate nonprofit organizations to have additional access to IRS records and information about registered nonprofit groups.

The proposed changes, which were originally included in the Pension Protection Act of 2006, lay out the timing and process by which states can obtain and inspect some federal tax documents. They include documents detailing information about final revocations of nonprofits as well as proposed revocations. States would also have access to records detailing denials of charity status to applicants as well as proposed denials to those applicants.

The rule also allows for the IRS to disclose returns related to nonprofits on its own initiative if it finds that the information is evidence of noncompliance with state laws.
The IRS is collecting comments until June 13. Comments can be viewed and made online.